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Estate planning for small businesses: what are your options?

On Behalf of | Dec 11, 2023 | Estate Planning |

As a business owner, safeguarding your interests and those of your business is paramount. You don’t need to wait until the inevitable happens before you put your affairs in order. If you own a business, one of the most pertinent questions you want answers to is how you can include your investment in the estate plan.

Whether you’re the sole proprietor or a shareholder in the enterprise, your family should understand your wishes and plans for the business. Before you get down to planning, you should first acquaint yourself with important basics.

Estate planning for different types of business

Just as there’s no standard estate plan for every individual, estate plans for businesses vary. So, what types of estate planning are there?

If you are a sole proprietor

In this case, you’re pretty much responsible for everything and your demise could mean the end of the business too. That is unless you stipulate in your estate plan that a trusted family member or a trust should take charge in your absence. In the plan, you should clearly outline whether the business will be inherited or whether it will be managed by a trust.

If you are in a partnership

A business where you’re a partner will most likely have its set of plans for the next cause of action when a partner passes away. Otherwise, drafting a practical plan to prepare for the inevitable is advisable. Estate planning for a business with more than one partner is the easiest to draft and the business can continue uninterrupted. You could indicate what happens to your shares and how your family benefits. The same holds true for corporations involving several members.

Estate planning for small businesses can be tricky. Understanding the right estate planning approach can help safeguard your legacy and ensure a seamless succession.